Delegated Powers and Law Reform Committee
At its meeting on 25 April 2023i, the Delegated Powers and Law Reform Committee considered the delegated powers contained in the Moveable Transactions (Scotland) Bill after Stage 2.ii
The Scottish Government Bill was introduced by the former Cabinet Secretary for Justice and Veterans, Keith Brown MSP, on 25 May 2022. The lead committee is the Delegated Powers and Law Reform Committee.
The Committee submits this report to the Parliament under Rule 9.7.9(b) of the Standing Orders.
The delegated powers in the Bill at Stage 1 were previously considered by the Committee at its meetings on 20 September and 25 October 2022, with its report on the delegated powers in the Bill at Stage 1 subsequently being published on 27 October 2022.
In its capacity as lead committee for the Bill, the Committee considered and completed Stage 2 of the Bill at its meeting on 21 March 2023. The Scottish Government subsequently produced a Supplementary Delegated Powers Memorandum (“Supplementary DPM”) taking into account the amendments made to the Bill at that meeting. This Supplementary DPM sets out the reasons for taking the Supplementary delegated powers in the Bill and the procedure chosen.
Provisions of the Bill
Section 31(5) – Searching the assignations record
Power conferred on: The Scottish Ministers
Power exercisable by: Regulations made by Scottish statutory instrument
Parliamentary procedure: Negative
Revised or new power: New
Provision
Searches of the assignation record may incur a fee to be payable. Section 31(4) states that no fee is payable for the search when the search is conducted by a not-for-profit money adviser who is not charging individuals for the services that they provide. Section 31(5) confers a power on the Scottish Ministers, by regulations, to be able to make further provision about the meaning of “not-for-profit money adviser”.
Regulations made under section 31(5) are subject to the negative procedure.
Committee Consideration
The same power is conferred in relation to searches of both the assignation and statutory pledges record. Searches of either of these records will incur a fee, unless it is a search carried out by someone meeting the criteria specified above, in which case the fee will not be payable.
This is a new power conferred on the Scottish Ministers which the supplementary DPM states is necessary as further clarity on the term may be required in the future by defining the term or listing those who qualify. The Scottish Government considers it would be disproportionate for this to be done by primary legislation; it is a matter of detail; it is limited in how it could be exercised; does not amend primary legislation and is not concerned with the operation of the record as a whole, so is subject to the negative procedure.
The power is limited to making further provision in relation to the meaning of a “not-for-profit money adviser” only. Regulations made under this provision cannot remove the exemption from paying the fees and they cannot amend primary legislation, they can only supplement it. There may be a need for further clarification in the future, with the example given by defining the term or listing those who qualify. It would appear appropriate that, should this need arise, it should be done through secondary legislation. For these reasons the negative procedure would provide a proportionate level of Parliamentary scrutiny to be applied.
The Committee accepts the proposed power in principle and is content that the exercise of the power will be subject to the negative procedure.
Section 43A(3) – Competence of individual acting as provider of a statutory pledge
Power conferred on: Scottish Ministers
Power exercisable by: Regulations made by Scottish statutory instrument
Parliamentary procedure: Affirmative
Revised or new power: New
Provision
An individual can only grant a statutory pledge when acting in the course of the individual's business, the activities of a charity, or the activities of an unincorporated association. The encumbered property must also be a permitted asset, which is specified in section 43A(2), which includes the corporeal property value exceeding £3000.
Section 43A(3) confers powers on the Scottish Ministers by regulations to modify the specified amount and also to modify this section so as to specify types of property which are or are not permitted assets.
Regulations made under this section are subject to the affirmative procedure.
Committee consideration
These are essentially new powers, however, it is considered by the Scottish Government that they are similar to the power previously contained in section 48(5) of the Bill as introduced. The previous powers placed restrictions on individual consumers being able to grant statutory pledges over household goods as a protection. It had a £1000 limit on the value of the household goods under which could not be subject to a statutory pledge which was able to be modified by regulations made by the Scottish Ministers. The Committee was content with the delegated power in section 48(5) as introduced. However, as part of the Committee's lead committee consideration of the Bill, it expressed concerns about the policy detail, finding the original £1000 value to be insufficient, and recommended this be increased. This recommendation has been implemented in the new power.
The power in section 43A(3) as amended at stage 2 now applies to individuals who are acting in a business and other capacity over permitted assets. There is a specified value of £3000 in section 43A(2) that provides a protection against low value household goods being subject to a statutory pledge which is to be read as being up-rated annually in line with inflation. The Scottish Ministers can modify the £3000 monetary threshold which corporeal assets must meet, and they can also specify types of property which are or are not permitted assets.
The reasons for these powers are stated in the Supplementary DPM as being the same as for the power as introduced. The reasons were to prohibit statutory pledges being made over low-value but essential items, such as clothing, white goods or furniture, and because a monetary threshold may not capture everything that needs to be exempt. It was considered to be unduly inflexible for such changes to be required to be done through primary legislation. Further, the Supplementary DPM states that as this provision will apply to unincorporated businesses it may be that the threshold value or the permitted assets may require modification in light of experience over time.
This section offers a protection to specified individuals granting statutory pledges. As such, the Scottish Government considers that the affirmative procedure is appropriate to provide the highest level of Parliamentary scrutiny. In addition, it will also permit the modification of primary legislation so the affirmative procedure would be the appropriate level of scrutiny to be applied here.
The Committee accepts the proposed power in principle and is content that the exercise of the power will be subject to the affirmative procedure.
Section 53(8) – (power to specify classes of vehicle to which good faith protections do not apply)
Power conferred on: The Scottish Ministers
Power exercisable by: Regulations made by Scottish statutory instrument
Parliamentary procedure: Affirmative
Revised or new power: Revised (the power itself has not changed, although the procedure to which it is subject has)
Provision
Section 53 provides protections to persons who have acquired a motor vehicle in good faith that is encumbered property. Section 53(1) sets out the conditions that require to be met for the acquired motor vehicle not to be encumbered property, including there is to be a sale agreement, the vehicle is encumbered property under a statutory pledge, it is not purchased for business purposes and the purchaser has acted in good faith.
Section 53(8) confers power on Scottish Ministers, by regulations, to specify classes of motor vehicle that subsections (1) - (7) do not apply to. Regulations made under section 53(8) may also amend sections 51 and 52 to provide that either, or both of those sections, do not apply to the specified classes of motor vehicles.
Committee consideration
This power, as introduced, was subject to the negative procedure unless it was amending primary legislation. The Scottish Government was asked by the Committee during its consideration of the delegated powers about the level of scrutiny being applied to this power. The Scottish Government provided further explanation as to why the negative procedure was considered appropriate, which was taken into account by the Committee in its considerations.
The Committee welcomed the further explanation as to why the negative procedure was considered appropriate from the Scottish Government, however, given the power could see the withdrawal of protection available to certain purchasers which may have a significant impact on the financial position of those individuals, it considered that the affirmative procedure would be more appropriate. The Committee recommended that the Scottish Government amend the Bill at Stage 2 to make all regulations under section 53(8) subject to the affirmative procedure such that there can be enhanced scrutiny of any proposal to specify the classes of motor vehicle that subsections (1) to (7) do not apply to.
The Scottish Government has made this amendment to the power in section 53(8) at stage 2 and, as noted in the Supplementary DPM, the power itself remains the same but is now subject to only the affirmative procedure allowing the highest level of scrutiny to be applied where the power is exercised.
The Committee welcomes the amendment made to section 53(8) of the Bill by the Scottish Government, accepts the proposed power in principle and is content that the exercise of the power will be subject to the affirmative procedure.
Section 102(5) – Searching the statutory pledges record
Power conferred on: Scottish Ministers
Power exercisable by: Regulations made by Scottish statutory instrument
Parliamentary procedure: Negative
Revised or new power: New
Provision
Searches of the statutory pledges record may incur a fee to be payable. Section 102(4) states that no fee is payable for the search when the search is conducted by a not-for-profit money adviser who is not charging individuals for the services that they provide. Section 102(5) confers a power on the Scottish Ministers, by regulations, to be able to make further provision about the meaning of “not-for-profit money adviser”.
Regulations made under section 102(5) are subject to the negative procedure.
Committee consideration
The same power is conferred in relation to searches of both the assignation and statutory pledges record. Searches of either of these records will incur a fee, unless it is a search carried out by someone meeting the criteria specified above, in which case the fee will not be payable.
This is a new power conferred on the Scottish Ministers which the supplementary DPM states is necessary as further clarity on the term may be required in the future by defining the term or listing those who qualify. The Scottish Government considers that it would be disproportionate for this to be done by primary legislation; it is a matter of detail; it is limited in how it could be exercised; does not amend primary legislation and is not concerned with the operation of the record as a whole, so is subject to the negative procedure.
The power is limited to making further provision in relation to the meaning of a “not-for-profit money adviser” only. Regulations made under this provision cannot remove the exemption from paying the fees and they cannot amend primary legislation, they can only supplement it. There may be a need for further clarification in the future, with the example given by defining the term or listing those who qualify. It would appear appropriate that, should this need arise, it should be done through secondary legislation. For these reasons the negative procedure would provide a proportionate level of Parliamentary scrutiny to be applied.
The Committee accepts the proposed power in principle and is content that the exercise of the power will be subject to the negative procedure.
Section 116(1B) – Interpretation of Act
Power conferred on: Scottish Ministers
Power exercisable by: Regulations made by Scottish statutory instrument
Parliamentary procedure: Affirmative
Revised or new power: Revised
Provision
Section 116 is the main interpretation provision in the Bill. Section 116(1A) includes a definition of “authenticated” and “executed”. Section 116(1B) confers power on the Scottish Ministers, by regulations, to modify (either or both) paragraph (a) or paragraph (b) of subsection (1A).
Committee consideration
Section 116(3), as introduced, conferred power on the Scottish Ministers, by regulations, to modify the definition of “authenticated” and the definition of “executed” in subsection (1). The DPM explained that the power permitted the Scottish Ministers to prescribe a different standard for executing paper documents or authenticating electronic documents than those provided for in the 1995 Act. This was to allow flexibility to change the definitions to be able to future-proof the Bill to take account of technological developments in the future.
The Supplementary DPM states at paragraph 26 that the provision was changed to remove the requirement for electronic documents to be authenticated using advanced or qualified electronic signature so a simple electronic signature can be used. The use of an advanced or qualified electronic signatures is, however, still available. The Supplementary DPM further states that the power is simply an updated version of the previous power found in section 116(3) and the reason for taking the power remains as described above.
The Committee was content with the power to modify the specified interpretive provisions in the Bill when considered at stage 1.
The power as revised is wider in its extent from that included in section 116(3) at the introduction of this Bill. The previous power was restricted to making regulations that could modify the definition of “authenticated” and “execution” as they appeared in section 116(1). Those definitions have been expanded and are now included in new section 116(1A). The revised power in section 116(1B) delegates the power to modify section 116(1A). Although the definitions are wider than before, the effect remains similar.
The provision is one which permits the modification of primary legislation so it is appropriate that the highest level of scrutiny be applied.
The Committee accepts the proposed power in principle and is content that the exercise of the power will be subject to the affirmative procedure.